In America Fortune 500 corporations pay 12.1 percent in taxes, on average, on their profits [source] versus the default rate of 34 to 35 percent that any small-to-midsize business (SMB) making over $335,000 USD per year in profit must pay. With corporate tax rates plummeting in half over the last three decades, individuals and SMBs in America are increasingly left to shoulder the difference.

However, it's important to remember the U.S. isn't the only country struggling with the increasingly parasitic nature of politically active corporations. Britain is currently grappling with similar issues.

American and domestic companies in Britain and other European Union states have been cleverly positioning their regional headquarters in the handful of member states with the lowest corporate tax rates.

For example Apple, Inc. (AAPL) made an estimated £6B ($9.50B USD) in Britain last year, but paid only £10M ($15.8M USD) in taxes. That astounding figure, which has many British natives grumbling, comes thanks to the British tax code's rule that largely exempts companies based in Ireland from paying British taxes.

Apple has installed its regional headquarters in Cork, Republic of Ireland. Thus it enjoys the low Irish 12.5 percent tax rate (which the British newspapers consider "ultra-low", but is ironically in line with the aforementioned current effective American rate for Fortune 500 firms), versus the 24 percent it would pay in Britain.

The Irish branch of Apple -- a subsidiary itself -- runs a series of shell companies that log British sales in "tax haven" regions like Ireland or the British Virgin Islands despite the fact that the physical point of sales is in Britain. Apple Retail UK Ltd -- one of these shell companies -- made a reported £500M ($791.8M USD) in 2010, but only paid £3.79M ($6.0M USD) in taxes.

Experts cited in a report by The Daily Mail estimate that of the $99.8B USD (£63B) Apple made globally in 2011, 10 percent of it came from the UK.

Apple's loyal legion dutifully lines up for the iPad launch in London. Apple is estimated to have to have only paid $15M USD in UK taxes, despite earning almost $10B USD from the island nation. [Image Source: Tim Ferguson/silicon.com]

This figure is hinted at in Apple's U.S. tax filings. While Apple pays well above the current hyper-evasive rate of the Fortune 500, it only paid an effective rate of 25.3 percent -- below the supposed tax rate of 35 percent. Apple credits this good fortune to "undistributed foreign earnings", which it plans to hold "indefinitely". Such commentary might draw greater scrutiny by auditors in the U.S., except that Apple wisely based its U.S. financial operations in Nevada -- a state known for a lax approach to tax enforcement.

Apple, which recently announced a dividend for shareholders, is hoarding $97.6B USD (£60B) in cash -- more money than the entire gross domestic product of Serbia. Valued at $590B USD (£370B), Apple is the world's most valuable company, and some experts it expect it to soon become the world's first company to be valued at a trillion USD.

The situation for Apple could soon be changing -- the U.S. Internal Revenue Service (IRS), has reportedly audited the company's 2007 to 2009 figures and has "suggested" "certain adjustments". Those adjustments could be in the form of forcing Apple to pay millions in unpaid taxes -- either to Britain's HM Revenue & Customs or to the U.S. IRS.

II. Apple is Not Alone, U.S. Companies Enjoying Field Day of Tax Evasion

While Apple draws the brunt of the scrutiny given that as the world's largest and most valuable corporation it is a beacon of corporatism, other American companies are following in a similar line.

Amazon.com, Inc. (AMZN) has placed its headquarters in the tiny European Union nation of Luxembourg -- the same nation where deceased North Korean tyrant Kim Jong Il reportedly sheltered his $4B USD fortune. Google Inc. (GOOG) -- makers of the world's most used smartphone operating system and the world's most used search engine -- based itself in Ireland and has subsidiaries in the Caribbean and Luxembourg for more tax dodging gains.

Google told The Daily Mail that this scheme -- which many would call "tax dodging" -- is necessary in today's corporate atmosphere, as responsibility to shareholders. States a Google spokesperson, "We have an obligation to our shareholders to set up a tax-efficient structure, and our present structure is compliant with the tax rules in all the countries where we operate."

Google also successfully dodged British taxes. [Image Source: Main Device]

In the U.S., Britain, and other wealthy nation states, change over such inequity is slow coming. After all, increasingly corporations are responsible of paying federal candidates' way into office -- regardless of their political affiliation. In office, these candidates inevitably look to serve their masters -- not the populous, but the corporations.

I agree with you there... Its really not about the tax code to me. I think the rich should pay more as they benefit more from the American system.... But the problem is spending. WTF will it take to reduce federal spending.

I feel like our govt. is a shopping addict with a dead end job that has only so much income and 400,000 dollars in credit card debt and its increasing by 20 grand every month. Instead of stopping spending and figuring out what to cut they are off buying more crap they dont need every day, increasing hte monthly output to 30 grand as if that will help.

See I don't even know what that means. Do the rich benefit more from the military? The roads? The educational system? They already pay more in taxes anyway, that much is fact. But I don't understand this pervasive attitude that the rich are "benefiting" more than anyone else. It completely seems grounded in jealousy and class warfare. As if they don't really deserve to prosper because so many aren't, so we'll use the tax code to hammer them and make us all feel better.

quote: But the problem is spending. WTF will it take to reduce federal spending. I feel like our govt. is a shopping addict with a dead end job that has only so much income and 400,000 dollars in credit card debt and its increasing by 20 grand every month. Instead of stopping spending and figuring out what to cut they are off buying more crap they dont need every day, increasing hte monthly output to 30 grand as if that will help.

Totally agree. And this goes back to my beliefs on taxes. The Federal Government of today has largely transformed itself into a massive wealth redistribution service. It's NOT about the day to day running of a decentralized minimalist Government anymore. The more you give them, the more they simply throw away. And even that's not enough, so as you said, they need "credit".

These spending levels are simply not sustainable. I can't believe we're talking about changing the tax code before we address this spending issue.

"Do the rich benefit more from the military? The roads? The educational system? "

Yes, they do. Especially from the military. But I don't want to hijack this thread into that direction. I am not into class warfare and not into the notion that anyone is vilifying the rich. Its jsut this simple,they make more, they benefit more from the American financial system and should pay more. Not more than they do now, just more than the poor pay.

Someone here at Anandtech had a great tagline years ago. It went something like this.... "You don't see alot of wealthy people clammoring to become poor to take advantage of the tax benefits" Makes alot of sense to me.

Anyhow, yes, the spending has to stop. The scary thing is its not really in the narrative of any political campaigns on the national level. Where is the "massive spending cuts" party?

quote: Its jsut this simple,they make more, they benefit more from the American financial system and should pay more.

They already do. What are we talking about here?

quote: Yes, they do. Especially from the military.

You're going to have to explain this one to me. The rich benefit MORE from the military than the rest of us? And please don't disappoint me by repeating some "war for oil" nonsense.

quote: Someone here at Anandtech had a great tagline years ago. It went something like this.... "You don't see alot of wealthy people clammoring to become poor to take advantage of the tax benefits" Makes alot of sense to me.

Awww that's cute. Plebeian socialist nonsense that has no bearing on anything. All that crap does is pit one class of Americans against the other. I wish we would stop doing this.

I guess I'm crazy. I still believe that people can rise up in this country, and that the Government has no moral claim to our earnings. But since unfortunately the "temporary" income tax is never going away, we should all be paying as little as possible.

quote: Where is the "massive spending cuts" party?

The Tea Party? You know, Conservative Republicans. But good luck winning an election when so many millions of Americans are now dependent on the entitlement state.